AI, Ambition, and a $3 Trillion Vision: Satya Nadella on Microsoft’s Bold Bet
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No one thought that AI will go and sort of make coding easy. But man, that was the moment when I felt like there's something afoot. When I first saw code completions in a Codex model, right, which is a precursor to 3.5, that is when I think we started building enough conviction that, one, you can actually build useful products. And software engineering, the team that you ran, I mean, engineers are skeptical people. ♪

Welcome to Founded and Funded. I'm Madrona Digital Editor, Coral Garnick-Duckin, and today we have a special live episode with Madrona Managing Director, Soma Soma Seager, and Satya Nadella, the Chairman and CEO of Microsoft. This discussion was recorded during our 2025th annual meeting where Satya joined us in person just weeks before Microsoft's 50th anniversary.

These two longtime friends unpack everything from the inflection points in Satya's leadership journey to the early days of GitHub Copilot to betting big on AI and OpenAI. He and Soma also dive into their shared love of cricket, why mission and culture still underpin execution, and how Satya thinks about AI's potential to drive broad economic growth globally.

With that, let's dive into it. Here is Soman Sach's live conversation. Satya, it's fantastic to have you here today. I don't know if you remember this, we had you actually at our annual meeting five years ago to celebrate our 25th anniversary back then. But it so happened that once we sort of agreed that we are going to do this, two weeks before the event, we had to go on a massive scramble. Like, you know, the world changed from everything being in-person to everything being virtual. But I'm so, so excited to have you in person here today.

Likewise. I'm glad it's in person. This year, we are celebrating a couple of different milestones. First and foremost, obviously, Microsoft is celebrating its 50th year anniversary. In fact, I think two and a half weeks from now is the actual date of the 50th year anniversary. April 4th, yeah. That's a fantastic milestone.

I spent 27 out of these 50 years at Microsoft and some of those years working closely with you. So for me personally, it's with a lot of personal joy and satisfaction to see how far Microsoft has come along under your leadership these last 11 years.

Coincidentally, we're also celebrating Medina's 30th year anniversary this year. Back in 1995, when the four co-founders of Medina started Medina, and I see Fall there, he was one of the four co-founders for us back then, the thesis and the bet for Medina was very simple. It was all about, hey, we want to take a bet on the technology ecosystem and the startup ecosystem in Seattle.

And 30 years later, we are so glad that they took the bed and we all joined the journey. But for all the progress that I think we've seen in Seattle, I think we are still scratching the surface. There's so much more ahead of us in the next 20 years, 30 years, 50 years, that we are excited to see where the world is going and how we can play a part in sort of shaping, help shape that world, so to speak. You know, 11 years ago, when you became the CEO for Microsoft,

I actually don't know how many people in this audience and in the world imagine that like, "Hey, there's going to be a day not in the too distant future." We are likely going to have two companies that collectively have a market cap of over $5 trillion in Seattle, Microsoft being one and Amazon being the other, right? But just looking at what you've been able to accomplish at Microsoft, when you took over as the CEO, Microsoft's market cap was around $300 million.

Today it's around three trillion. It's a phenomenal progress and one that I definitely did not imagine. And I continue to sort of think about like, hey, how did this happen and what caused it to happen? But did you hold? A lot. That's good. I'm still, in addition to everything else, I'm a shareholder of Microsoft. I'm excited about that. So, okay.

But Satya, congratulations on a great, great run at Microsoft so far, and I know there's still a lot more to go there. I do know that everybody here in the audience is really interested in hearing from you, so I should stop my ramble and dive into the conversation. I want to take you back 11 years ago. When you decided that, "Hey, I'm going to take on the mantle to be the CEO for Microsoft,"

What were some of the things in your mind in terms of what were your expectations? What do you think might happen? And then talk about some of the key inflection points in the last decade in your tenure as the CEO of Microsoft. First of all, thank you so much for the opportunity to be here. It's great to be celebrating, I guess, your 30th year. And as you said, for me,

I've been thinking a lot about our upcoming 50th, which is unbelievable to think about it. I was also thinking about yesterday, I was seven years old, I guess, when Microsoft formed. And a lot has happened. In 2014, when I became CEO, so quite honestly, at that time, my frame was very simple.

I knew I was walking in as the first non-founder, right? Technically, Steve was not the founder, but he had founder status at the company. The company I grew up in was built by Bill and Steve, and so therefore,

I felt one of the things as a non-founder was to make first class again what founders do. What founders do is have a real sense of purpose and mission that gives them both the moral authority and telegraphs what the company was created for and what have you. And I felt like we needed to reground ourselves. In fact, back then, one of the things I felt was

Wow, in 1975 when Paul and Bill started Microsoft, they somehow thought of software as a, in fact the software industry didn't even exist. But they conceived that we should create software so that others can create more software and a software industry will be born.

And that's sort of what was the original idea of Microsoft. And if that was relevant in '75, it was more relevant in 2014 and it's more relevant today in 2025. And so I sort of went back to that origin story, took inspiration from it, re-articulated it as our mission now that we talk about, which is empowering every person and organization on the planet to achieve more. So that was one part.

The other piece that I felt also, again as a non-founder, was to make culture a very first class thing. Because again, in companies that have founders still, culture is also implicit because it's sort of a little bit of the cult of the founder, you can get away with a lot. Whereas a mere model CEO like me can't. And so you needed to build

more of that cultural base even. And so I must say I was lucky enough to pick the meme of growth mindset from Carol Dweck's work. And it's done wonders. And quite frankly, it's done wonders because it was not considered as new dogma from a new CEO because it spoke a lot more intrinsically to us as humans.

both in life and at work, and so therefore both these things, right, making mission a first class explicit thing, and culture, these two things,

And then of course they're necessary but not sufficient because then you gotta get your strategy right and execution right and you've got to adapt because everything in life is path dependent. But you don't even get shots on goal if you don't have your mission and culture set right. And so that's sort of at least what I attribute a lot of at least our, and we have stayed consistent on that frame I would say for the last, what, 11 years.

If you go back to, I think you took over in February sometime, and then in May that year, 2014, your first announcement externally came up as, hey, we are going to take Office cross-platform.

and that I thought was sort of visceral, particularly people who knew Microsoft until then or who had been part of the Microsoft ecosystem in one way, shape, or form, knew how big of a statement that was. Was it a conscious decision on your part to say, "Hey, I need to signal, not just to the external world, "but to my own organization, what it means?" Yeah, I mean, the Microsoft that you worked at and that I worked at, you know, you've got to remember we launched Office on the Mac before there was Windows even. So in some sense,

Obviously we achieved a lot of success in the 90s, and so therefore we went back to Windows is the only thing that is needed and the air we breathe and what have you. But it was not...

But it was really not the company's core gene pool. Our core gene pool was we create software and we want to make sure that our software is there everywhere. And obviously it's not like I came up in February and said, let's build the software. Obviously Steve had approved that. But it worked well because it helped unlock, to your point,

What was Microsoft's true value prop in the cloud era? See, one of the things when I look back at it, if sort of God had come to me and said, "There's mobile and cloud, pick one."

how to pick cloud. Not that mobile is not the biggest thing, but if you had told me pick one, I'd pick something that may even outlast the client device. And so therefore, that's what was the real strategy, which is we knew where our position at that time was on mobile. We were struggling at third.

Having seen what happens to number three players in an ecosystem, I felt like, wow, that strain had left the station. So therefore it was very important for us to make sure we became a strong number two in cloud at that time. And then in fact more comprehensive than even our friends across the league because of what we were doing on Office 365 and Azure. And so we just doubled down.

And when you double down on such a strategy, you got to make sure that your software is available and your endpoints are available everywhere. And so that was what that event was all about. Great. You just referenced culture and cultural transformation and growth mindset in the context. By the way, if any of you haven't read that book, I'm a huge believer in that book. I think that book is one of the best books that's been written on culture. Please get a copy and read it. It's a fantastic book and something that I

I try hard to practice every day and I can tell you I'm still learning. But I've also heard you talk a lot about like, hey, changing the culture from a know-it-all culture to a learn-it-all culture kind of thing. But like anything else, like, you know, when you sort of took on the mantle, there was already a hundred thousand people, strong organization that was steeped in a particular set of ways of doing things and thinking about things. How easy or hard was it for you to go through the cultural transformation? Yeah, I mean, I think the beauty of,

the growth mindset framework, if you will, is not about claiming growth mindset, but confronting one's own fixed mindset, right? I mean, at the end of the day, the day you say you have a growth mindset is the day you don't have a growth mindset. That's the nice recursion in it. And it's hard, and it has to start with

it has to start with setting the tone. Take even, let's face it, in large organizations like ours, or anyone I guess, it's easy to talk about risk because you want the other person to take risk. Or it is easy to say let's change. It's the other person who should change. And so in some sense, the hard part of organizational change is

that inward change that has to come. And so this thing pushes you on it, but it gives you at least a way to one, live that and by giving, or rather by living up to that sort of high standard of confronting your own fixed mindset, you can hope to make that large scale change happen.

And like all things, Soma, it's always top down and bottom up, right? I mean, you can never do anything in any one direction. It has to happen across both sides of it and all the time. The other thing I must say is you have to have patience. You can't come in in the morning and say, hey, we need to have by evening growth mindset. You kind of have to basically let even leaders

bring their own personal passion to it, personal stories to it, give it some room to breathe. And I think somehow or the other, not because we really thought it all through, it took on, as I said, some organic life. People sort of felt like this was a meme that made them better leaders, it made them better human beings.

And so therefore I think that that's what really helped and we were patient on it. Like for example, the classic thing at Microsoft would have been to metric it and then say green, red, yellow, and then start sort of doing bad things to all the reds and then it would have been gamed in a second. We didn't do that. At least, and that I think helped a lot. And like all things, it also can be taken to the extreme. There are times when I'm in meetings where people

will look around the room and say, here are all the people who don't have a growth mindset versus saying, look, the entire idea is to be able to sort of talk about your own fixed mindset. So I think it's a journey that,

By the way, the best feature of that cultural thing is that it's never done. You never can claim that job done. Right now, oh my God, talk about it, which is you're in the middle of again saying, "Well, we've got to relearn everything because there's a complete new game in town again."

So before we talk about AI, I thought I'll talk, we'll talk a little bit about something that is personal to you and hopefully something on a lighter note. You've been a cricket player in high school and college, okay?

And it's been sort of fun working with you these last many years, right? Trying to bring cricket to the US through Major League Cricket. And you've mentioned this many times, Satya, about how that sport has shaped your thinking, your leadership style, in fact, had a positive impact on your life. Share with us a little bit about that. Yeah, Caitlin, who works with me, is here. Every time I post on cricket,

I get all these likes from India and she says, "God, why don't they do the same when you post on Microsoft products?" It's like a billion and a half people who are crazy can do that for you.

- You know, it's your look. I think all team sport, I think, shapes us a lot. I think it's sort of one of those cultural things that I do, when I see leaders, and you can easily trace back to the team sports they played and how it sort of impacts how they think about it. I mean, there are three things that I think I've written a lot about, and I think a lot about even daily. I mean, like, I remember

There was this one time, it's interesting, there's this guy that you know, Harsha Bogle, who actually went to the same high school as me. And recently I was talking to him and he was telling me about our, we call them physical directors, think of them as a coach. I think is the best translation. But anyway, so we were playing some league match and there was this guy from Australia who suddenly happened to be in Hyderabad of all things and playing for the opposition.

And he was such an unbelievable player, and I was sitting, I was fielding at whatever, at forward short leg, and watching in awe of him. So I hear this guy yell, saying, compete, don't sort of admire. Huh.

And it just sort of, it's like when you are in the field, that zeal, the competitive spirit, and giving it all, I think it's just such an important thing that sport teaches you. That ability to get the energy to go play the game is one. The other one that I'll say, talking about teams,

I'll never forget this. There was this unbelievably important match of ours. You know, there was this unbelievable player who was pissed off at our captain for whatever reason, because I think he changed him soon or what have you. And the guy just drops a catch just on purpose, right? And think about, like, the entire 11, right? All our faces dropped. We were all so on, you know, sort of pissed off, I guess. But also more let down.

When in fact your star player who somehow sort of feels like, you know, he wants to teach us a lesson and then thereby, you know, cause us to lose. And then the last thing I would say is, which has probably been the most profound impact in me, is what is leadership lesson? There was a captain of mine who went on to play later a lot of, you know, first class cricket. And

You know, one day I was a bowler and I was bowling some thrashy off-spin and so this guy, you know, takes the thing, you know, he changes me, he bowls, he gets a wicket, but he gives it back to me the next over. And that's a match I got some four or five wickets in. Then I asked him, like, "Why the heck did you do that?"

And he comes to me and he says, you know what? I needed you for a season, not for a match, because I wanted to make sure that I could make sure that your confidence is not broken. I said, man, for a high school captain to have that level of enlightened leadership skills, that's the idea, right? Which is leadership is about having a team and then getting the team to perform for a season. And I think that, yeah, so I think team sport and what it means to all of us,

culturally and what it means in terms of teaching us the hard lessons in those fields is something that I think a lot about. That's great, that's great. And of course, I think a lot about MLC too. Season three starting- The sports market is not sufficiently penetrated in the United States. It's like, talk about, you got to make your money somewhere else.

Let's talk about AI now. You sort of mentioned this, that if you look at the history of Microsoft, we are sort of in the beginning or in the middle of the fourth platform wave. First one was client-server, then it was internet and mobile, and then the cloud, and now it's AI. And Microsoft, as much as we talk about AI a lot these past few years, Microsoft has had investments in AI for decades now.

Tell me a little bit about how you decided, hey, in addition to everything that we are doing ourselves, how do we think about partnering with OpenAI? I love the way you say ourselves, that's good. No, sorry. How does Microsoft think about partnering with somebody like OpenAI? And then more importantly, how has that partnership evolved till today, and what do you think the future is going to be of that partnership? Yeah, it's a good point. I think in 1995 is when we had our first

ML research team and MSR speech, that was the first place we went to.

And obviously we had lots of MSR work. Here's the interesting thing, right? Which is even the OpenAI side, we had two phases of it. In fact, the first time we partnered with them was in the context of where they were doing, you know, Dota 2 and RL at that time. And then they went off on that. I was kind of interested, but

RL by itself, at that time at least, we were not that deep in. It's when they said we want to go tackle natural language with transformers, that's when

we said, let's go back. Quite frankly, that was the thing that OpenAI got right, which is that they were willing to go all in on scaling laws. In fact, the first paper I read was interestingly written by Ilya and Dario on the scaling laws.

and saying, hey, we can go through compute and see scaling laws work on transformers on natural language. And natural language, I mean, if you think about Microsoft's history, for those of you who've been tracking us,

Bill has been obsessed about natural language, and of course the way he has been obsessed about it is by schematizing the world. To him, it was all about people places things, beautifully organize it into a database, and then do a SQL query, and that's all the world needs. That was the Microsoft that we dreamt of, and then of course when we thought of AI was adding some semantics on top of it. That's sort of how we came up.

But that was, it turns out in hindsight of course, when we were taking that bet, it is unclear to us quite frankly. But to me when I first saw code completions in a codex model, right, which is a precursor to 3.5, that is when I think we started building enough conviction that one, you can actually build useful products. And software engineering, the team that you ran, engineers are skeptical people, right? I mean they're not,

easy folks to believe. I mean, coding, no one thought that AI will go and sort of make coding easy, right? But man, that was the moment when I felt like there's something afoot, definitely my belief in scaling laws, you know, and the fact that you could build something useful

And so then the rest is history. We just double down on it. And if I look at like even today when I look at GitHub Copilot, it's unbelievable to see in the whatever three years or so there's code completions. And by the way, all of these things are happening in parallel. Code completions are getting better. We in fact just launched a new model even for code completion. And then chat of course is right there. You have multi-file edits.

You have agents that are working at their full repo, and then we have a SWE agent that is more like you're going from, I'll say, pair programmer to a peer programmer, right? So it's all like a full system being built off of effectively what is one regime. I remember like now, this was before GitHub Copilot had launched in beta or whatever it is to the world.

You and I were having dinner and you literally spent probably 20, 30 minutes there talking about this new thing that the GitHub guys were doing called Copilot. I remember walking out of that meeting thinking, I need to go talk to my buddies in Dev Dev to understand what is happening here. Because I haven't seen you that animated and excited about something.

and this was well before it sort of came into what I call as a product finally, but those early days, how did you sort of decide to take a bet on that inside the company? Because I would assume that in any organization, there's going to be some level of resistance to something new that is going to be fundamentally a paradigm changing thing. Yeah, I mean there are two phases to that as well. GitHub Copilot was the first product, and then ChatGPT happened.

And ChatGPT, quite frankly, you should ask the OpenAI folks, but nobody thought that this is a product. I mean, it was supposed to be like, hey, at best, maybe some data collection thing. And then, rest is history.

But I must say that was the thing that really helped, right? Which is the beauty of at least Microsoft's position was one, the partnership with OpenAI. Second thing is we were already building products like GitHub Copilot, and thankfully ChatGPD happened because then there was no, and we were ready, right? So once ChatGPD happened and we had built a product and we had built a stack, it was easy to copy paste, so to speak, across all of what we were doing.

But a lot of these waves are that, which is, if I look back at it, even in the four waves, you could say Windows, we had one, two, and three, but I joined really post three. And that was what we did. Once Windows 3 hit, it was like we knew what to do after.

That's where I think the path, and we were ahead. In some of the others we were behind, but that's fine. But this one we were ahead and so we executed pretty well, quite frankly, across the length and breadth of the Microsoft opportunity. But as you rightfully point out, but it's still very early. I think in backstage you and I were talking about it. I think I feel it's a little more like the GUI wave pre-office

or the web wave pre-search. I think we're still trying to figure out where does the enterprise value truly accrue? Is it in the model? Is it in the infrastructure? Is it in one app category? And I think all that's to be still litigated.

We have a point of view on that, but let me turn around and ask you that. And if you look at the AI stack today, right, you've got AI infrastructure, you've got models, you've got applications, what we call intelligent applications. We sort of historically always believed that, like, hey, application layer is where you're going to have the most

what I call value creation over a period of time, right? Whether it's horizontal or vertical or some combination thereof. Do you see that trend also following through here in AI or do you think differently? It's a great question. I mean, I think that if I look back through sort of all these tech shifts, I think all enterprise value accrues to two things, right? One is some organizing layer around user experience.

and some sort of, I'll call it, change in efficiency at the infrastructure layer, right?

GUI on the client and client server, right? So that was sort of one. Or you could say search as ultimately, although we thought browser for the longest time, but turns out search was the organizing layer of the web. And then SaaS applications and the infrastructure and databases and what have you. And same thing with cloud. So I think in this case, I think hyperscale business, I mean, when I look at our business,

If you ask the question five years from now, even in a fully agentic world, what is needed? Lots more compute. In fact, it's interesting when I look at, let's take Deep Researcher or what have you. Remember, Deep Researcher needs a VM or a container.

And so in fact, it's sort of the best workload to drive more compute. And in fact, if you look at the ratio, like even take ChatGPT, it's a big Cosmos DB customer, right? Which is all that state is in databases. In fact, the way they procure compute is they have a ratio between the AI accelerator to storage and compute.

And so hyperscale, I think, is just going to be, you know, being one of the hyperscalers is a good place to be in to be able to build the infrastructure. You've got to be best in class in terms of scale and cost and what have you. Then I think after that it gets a little muddy, right? Which is because what happens to models? What happens to app categories?

I think that's where I think time will tell, but I go back and say each category will be different, right? Consumer, there will be some winner-take-all network effect. In the enterprise space, it'll be different. That, I think, is where we're still in the early stages of...

of figuring out, but I kind of think the stable thing that at least I can say with confidence is the world will need more compute. You sort of have a very unique vantage point in terms of who you talk to day in and day out, whether it's Fortune 100 CEOs or whether it is head of governments or what have you, right? You recently mentioned something about like, hey, one way to think about maybe the impact of AI success is its ability to boost the GDP of a country or the world or whatever it is, right?

That's sort of a fascinating way to think about what AI's impact would all be over a period of time. Can you elaborate a little bit on that? Yeah, I mean, I said that in response to all these benchmarks on AGI and so on, and it's a little too, I find that entire, first of all, all the evals are saturated, it's becoming slightly meaningless, but if you set that aside, the

Just like take the simple math. Let's say you spend $100 billion in CapEx. And then you say, okay, you got to make a return on it. And then let's just say roughly you were to make $100 billion a year on it. In order for you to make $100 billion on it, then what's the value you have to create, right, in order to make that?

And it's multiples of that, right? And so that ain't going to happen unless and until there is broad spread economic growth in the world. So that's why I kind of look at it and say my formula for when can we say AGI has arrived when, say, the developed world is growing at 10%.

which may have been the peak of industrial revolution or what have you, that's a good benchmark for me. If you ask me what's the benchmark, if this is going to be the new, you know, this is the intelligence abundance and it's going to drive productivity, I think we should peg ourselves. In fact, we should say the social permission at least for companies to

invest what they're investing in, both from sort of the markets as well as the broader society, will come from, I believe,

our ability to have broad sectoral productivity gains that's evidenced in economic growth. And by the way, the one other thing that I'm excited about is this time around, it won't be like the Industrial Revolution in the sense that it's not going to be about the developed world or the global north and the global south. It's going to be about the entire globe because guess what? Diffusion is so good that everybody is going to get it at the same time. So that'll be the other exciting part. Thank you for being here.